If you owe the IRS and State of Kansas taxes, a bankruptcy & tax debt lawyer may be able to help. Read on to see how you may be able to discharge tax debts in Bankruptcy.
For tax debts to qualify for discharge in bankruptcy, they must meet these basic guidelines. This is often called the 3-2-240 rule:
The Bankruptcy Code’s treatment of unsecured tax claims joins the two concepts of priority and discharge, 11 U.S.C. §§ 507(a)(8) and 523(a)(1). Tax debts are broken down along three basic categories: (1) Some taxes are priority/nondischargeable – (2) Others are nonpriority/nondischargeable – (3) All the rest are nonpriority/dischargeable.
The first type of unsecured tax debts includes: Taxes on returns where the due date of the return, counting extensions, is within 3 years of the bankruptcy filing date – Taxes assessed within 240 days of the filing date – Trust fund taxes, no matter the age – Taxes that have not been assessed but are still assessable
The second type of unsecured tax debts includes: Taxes on returns that have not been filed – Taxes on returns filed late within 2 years of the filing date – Taxes on fraudulent returns; or, taxes for years where the taxpayer willfully attempts in any manner to evade or defeat taxes that are due
The third type of unsecured tax debts: If neither priority/nondischargeable nor nonpriority/nondischargeable, then the unsecured tax falls into the catchall of nonpriority/dischargeable
Here is an easy way to keep this straight:
The first step in determining if your tax debts are dischargeable is to obtain a tax transcript – specifically an “account transcript” or “literal transcript”. The account transcript will show the due date, filing date, and assessment date, which are crucial in determining whether the taxes fit within the 3-2-240 rules. To order a transcript, see http://www.irs.gov/Individuals/Order-a-Transcript You can order the transcript online, by phone at 1-800-908-9946 FREE, or by using IRS Form 4506T. The request will take up to two weeks to process.
You can also work with one of our Topeka or Lawrence tax attorneys to do this.
Some actions can add additional time to some or all of the above time requirements, including:
The time periods under the 3-2-240 rules are tolled (suspended) while any of these events are pending. However, simply entering into a payment arrangement with the IRS does not toll the time periods under the 3-2-240 rules.
To Learn More About Discharging Tax Debts in Chapter 7 or 13 Bankruptcy, Call 785-379-3600 to speak with Chris W. Steffens, a Kansas Licensed Bankruptcy Lawyer or you can email us now.